stratfor.com: Koizumi Abandons Economic Reforms

verfasst von Cosa, 05.09.2001, 12:06

Hallo,

hier ein ganzer Artikel zu Japan von stratfor.com - umsonst gibt es sonst ja nur abstracts:

<font size="4">Koizumi Abandons Economic Reforms</font>

Summary

In the face of record high unemployment, and with the Japanese
stock market at a 17-year low, Prime Minister Junichiro Koizumi
has abandoned the economic reforms that might have helped his
country turn the corner. As a result, Koizumi is expected to
embrace Japanese nationalism to maintain his popularity and hold
on power.

Analysis

Japanese Prime Minister Junichiro Koizumi won election last April
promising a radically new way of dealing with the country's
economic problems: unrelenting reforms and an avoidance of debt.
Unlike his predecessors, he bluntly warned that the process would
be excruciatingly painful and Japan would not experience real
economic growth for at least three years.

But due to the feared political backlash, Koizumi is now
backpedaling on the few positive policies that his predecessor,
Prime Minister Yoshiro Mori, actually managed to put forward. His
reaction to the country's economic problems will only add to
Japan's already historical economic meltdown and lead the prime
minister to adopt a more nationalist stance to in hopes of
staying in power.

Japan is facing record high unemployment, and its stock market
hit a 17-year low on Aug. 30. Even by the time Koizumi took
office five months ago, Japan's economy -- the world's second
largest -- had probably already fallen too far to be salvaged by
the prime minister's proposed reforms. Koizumi is already backing
away from his campaign promises, which if enacted would inflict
pain the likes of which the Japanese have not known for more than
a generation.

For example, the government is now refusing to force Japanese
banks to write off their mountain of bad loans. This debt is
crushing the banks, and since their assets are predominately
stock holdings in companies that should be declared bankrupt,
they are finding it impossible to generate the capital needed to
function as lenders. Writing off those loans is essential if
Japan is ever to have a healthy financial system, and it is the
one thing that might be able jumpstart new economic activity.

The Mori plan, which Koizumi embraced as his own, would have
forced write-offs on most of those bad loans within three years.
Now, only half of those loans will be dumped in seven years,
turning a plan of limited efficacy into a worthless one.

Koizumi's employment initiative is equally underwhelming. Japan's
current unemployment rate of 5 percent is the highest of its
post-World War II history. Since the government's method of
collecting statistics masks underemployment, the actual rate is
probably underestimated by at least half. And for a consensus-
based society like Japan's, the impact of 1 in 20 people being
out of work is far greater than in individualistic America.

Instead of trying to retrain workers or promote reforms that
would boost businesses, Koizumi last week announced a policy that
will pay companies 300,000 yen ($2,500) for every unemployed
person older than 45 that they hire. The government is in effect
subsidizing the rehiring of middle managers who were let go
because they weren't productive in the first place.

That's hardly the type of"reform" Japan's arthritic economy
needs, but it will help Koizumi pacify the Japanese electorate as
the economy continues to contract.

There is, however, one potential bright spot for Japan's future.
Of the nearly 20,000 positions Toshiba is eliminating, 17,000 are
in Japan, demonstrating that the company recognizes its home
operations are among its least efficient. If companies start
reforming on their own, the trend might force Koizumi to engage
in more realistic policies.

Finally, there's the debt issue. At the core of Tokyo's inability
to resuscitate the economy is the nearly $6 trillion in debt the
federal government has accrued. Much of the debt originated as
"supplementary budgets," stimulus packages directed to Liberal
Democratic Party allies in the construction sector for wasteful
infrastructure projects.

Koizumi has now decided for political reasons to continue with
the supplementary budgets. The new spending, weighing in at a
mere $15 billion, allows the prime minister to keep his promise
for now to limit bond-financed deficit spending.

But $15 billion certainly won't be enough to defibrillate the
dying $4 trillion Japanese economy. More spending must eventually
flow, which would wash away the last of Koizumi's campaign
promises.

No democratic leader can break all of his major pledges and
preside over an economic crumbling, without severe political
consequences. It is highly likely Koizumi will start looking for
some scapegoats.

Koizumi may first purge some of the more incompetent members of
his Cabinet, but not all of the scapegoats need to be domestic.
Koizumi has already laid the groundwork for whipping the public
into a frenzy against outside powers and there is no shortage of
candidates.

Diplomatic clashes that would grant Koizumi huge amounts of
political capital are brewing with South Korea over historical
revisionism, with Russia over the status of the Russian-occupied
Kuril Islands, and with the United States over security issues.
The juiciest target, however, is China, Japan's traditional
bugaboo.

Using nationalism to increase his popularity is a far more
attainable strategy for Koizumi than his economic reform plans,
and falls into his populist image. Everything from Koizumi T-
shirts to CDs indicates the prime minister is becoming a cultural
icon.

The mix of nationalism and populism may not be the best way to
manage Japan's economy, but it will be more than enough to keep
Koizumi in power -- at least until the Japan economic bedrock
collapses under him.

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• stratfor.com: Koizumi Abandons Economic Reforms - Cosa, 05.09.2001, 12:06